Held that the additional income offered had been assessed under the head “Business income” while completing the assessment under section 143(3) read with section 153A of the Act for the assessment years 2012-13 to 2017-18. The director in his statement had clearly stated that the source of cash spent for referral fees was the receipts from the patients who came to the assessee for various scans and tests and that these receipts were booked as sales in the books of account. Thus, it was clearly established by the assessee that the unaccounted expenditure paid towards referral fees was sourced through the business receipts of the assessee during the course of business. Under section 69C, when an assessee offers no explanation or the explanation offered is not satisfactory in the opinion of the Assessing Officer, the amount of such expenditure is to be taxed as income under section 69C of the Act. The satisfaction to be recorded by the Assessing Officer should not be objective satisfaction exercised at his discretion, but a subjective satisfaction on the basis of objective material and such satisfaction must be reflected in the reasons recorded in writing while exercising the power. In the case of the assessee which was in the business of running a diagnostic centre, its only source of income was the receipts from patients which were stated to be the source for the unexplained expenditure. The Assessing Officer had not brought any contrary material on record to state that the source for the expenditure was other than from business income. He had formed his opinion based on conjectures and surmises. While exercising quasi-judicial functions, the administrative authorities have to reach satisfaction on the basis of material available and not on conjectures and surmises. The test of reasonableness has to be satisfied which failed. Accordingly the additional income offered could not be taxed under section 115BBE. The assessee was allowed to set off the current year’s loss against the additional income offered to tax as business income. (AY.2018-19)
Ragavs Diagnostic and Research Centre Pvt. Ltd. v. ACIT (2022)99 ITR 15 (SN)(Bang) (Trib)
S. 115BBE : Tax on specified income-Search-Unexplained expenditure-Diagnostic Centre-Additional income offered as business income-Referral fees-Unaccounted expenditure-additional income cannot be taxed at special rate-Current years loss is allowed to be set off-Reasons recorded cannot be based on conjectures and surmises. [S. 69C, 153A]